Understanding Your Local Property Tax Statement

Do you know how your city compares in terms of property tax values? You may have some concerns that you are paying taxes that are much higher than those of others, in which case you could perhaps get a reduction. All of this information will be listed on your property tax statement, but that is quite a confusing document. It has complex terms and rates on it, which can all feel quite overwhelming. Yet it is actually quite simple. You need to know your city’s tax rate and assessment ratio, and the value of your property.

Your property’s market value is what you would be able to sell it for today, not counting any “undue influences,” which include such things as structural issues, foreclosure, short sale, and so on. In simple terms, it is the price your home would sell for under normal conditions.

The Assessment Ratio:

One of the key things to look for on your property tax statement is the assessment ratio. This is also known as the “property tax value”. Cities take your market value and multiply it by the ratio, which is your assessed value. If you have a $250,000 home with a 50% assessment ratio, your property tax assessed value would be $125,000. Each state has its own assessment ratio and this sometimes even varies between jurisdictions. Hence, you are likely to have a completely different rate than someone in a neighboring city.

The Tax Rate:

The next thing to look for is the tax or mileage rate. This is what you will really pay in your city. Again, there are important geographical differences here, as well as differences between buildings. The rate for a residential property will be different from that of a commercial property. Plus, if it is a residential property but not your primary residence, then you are likely to have to pay a higher rate as well.

Property Tax Valuation:

If you believe your property tax statement is incorrect, you can make an appeal. However, the only thing that you can appeal is your property’s fair market value. You cannot appeal the assessment ratio, nor the tax rate, as they are set for the entire geographical area. The only exception would be if someone made a spelling mistake, or if your property is placed in an incorrect category. Overall, it is the value that you will likely argue against, which means you have to take on an assessor’s opinion. While this may sound hard, the reality is that most assessors are under-qualified and/or overworked, and they make a whole lot of mistakes. If there are similar properties in your area with far lower values, then it is likely that your appeal will be successful. This could save you a great deal of money.

Around 98% of people who own property simply pay what they are told. They don’t bother looking at the details, nor do they appeal if they believe there has been an error. The appeal process is surprisingly easy and not time consuming, so take advantage of it.